Guernsey will give more access to the register which shows who owns a company this year, if States members agree.
But the proposals, which are years later than expected, do not go as far as meeting UK Government demands for full public access, while opening the beneficial ownership register up to those with a legitimate interest like investigative journalists remains some way off.
Beneficial ownership registers are seen as a key tool in tackling financial crime.
Policy & Resources’ States report proposes beginning granting access to obliged entities, mainly regulated finance companies, from some time in 2025, having previously announced this would happen in 2022 and then in 2024.
Access for those regarded as having a legitimate interest, which could include those conducting business transactions, civil society, journalists, law enforcement and higher education, is still being developed in line with the latest update to EU anti-money laundering directive.
“During the last decade or so, there have been high levels of political interest in the UK about the transparency of beneficial ownership information,” P&R’s report states.
“This has been seen from the various UK Governments (both Conservative and Labour governments), the opposition parties and some individual backbench Members of Parliament.
“It seems that the pressure is politically motivated and not directly aligned to effectiveness of measures to combat financial crime or to meet and maintain international standards.
“The Bailiwick of Guernsey has consistently maintained that it has an effective regime of regulation and effective sharing of beneficial ownership information with UK and other foreign law enforcement and tax authorities.
“Guernsey’s approach differs from larger jurisdictions due to the extra layers of regulation and due diligence required for company formation and administration in Guernsey.”
Court ruling caused a change of direction
In 2019, the Crown Dependencies of Guernsey, Jersey and the Isle of Man all committed to having access for obliged entities by the end of 2022 and said they would then review full public access.
This work was paused after a Court of Justice of the European Union ruling in November 2022 that said providing the general public with access to information of beneficial ownership is not proportionate to the legitimate aim of preventing money laundering and terrorist financing.
“Following consideration of the expert legal advice on the effects of the CJEU Judgment and its relationship to ECHR rights, it was clear to the Committee that access to registers of beneficial ownership by the general public would constitute a breach of the ECHR obligation to the right to respect for private and family life (or right to privacy).
“The ECHR rights are given effect in domestic law in the Bailiwick (as well as in Jersey and the Isle of Man) which means that such a breach would very likely be upheld in the domestic courts.
“The Committee concluded that any legislative or policy changes to allow access to the island’s register of beneficial ownership by the general public without the necessary safeguards would be considered unlawful in Guernsey’s domestic law as well as a breach of the island’s international obligations.
“The Committee concluded that it would no longer be possible to proceed with the parts of the 2019 Joint Commitment and associated Guernsey action plan about general public access.
“The legal advice concluded that it was possible for access by obliged entities to be granted in a way that is consistent with the right to privacy. The Committee decided that relevant legislation could be recommended to the States of Deliberation at the earliest possible opportunity.”
The CJEU Judgment looked at mitigating measures. It noted that certain categories of persons with a legitimate interest for specified purposes, laid down by law, could be provided access without offending the principle of right to privacy.
Delays mount up
In December 2023, the Crown Dependencies updated their commitment, saying that they anticipated changing the law to allow obliged entity access during 2024.
But Guernsey prioritising work on the Moneyval assessment has seen this slip again.
The European Union’s Sixth Anti-Money Laundering Directive was agreed on 31 May 2024. It includes a legitimate interest test that takes into account the court judgement that had previously delayed Guernsey’s work in this area.
“AMLD6 states that legitimate interest categories would include non- governmental organisations, academics and investigative journalists who contribute to the objectives of fighting against money laundering and terrorist financing. Access to beneficial ownership information is considered important for them to undertake their functions and to exert public scrutiny, where appropriate.”
Implementation of legitimate interest access in the EU is due by 10 July 2026.
“Appropriate changes to access to information on Guernsey’s beneficial ownership register may provide a mechanism to ensure the Bailiwick remains off the EU tax cooperation blacklist or ‘greylist’.”
The EU is still developing fully its own definitions of legitimate interest access and corresponding policies.
P&R says that only when that work is complete a further policy letter should be presented to the States about the implementation of legitimate interest access for Guernsey’s register.
This will be “in a timescale that is aligned with the EU’s own implementation”.
Some European countries, including the UK which introduced its beneficial ownership register in 2016, have kept public access despite the court ruling.
Gibraltar is the only British Overseas Territory that has a publicly accessible register.